How to cash in on the crypto crash

The price of Bitcoin — the first cryptocurrency — has suddenly crashed to under $30,000 after several weeks of struggling to hold on to its gains. And where BTC goes, altcoins tend to follow. Ethereum (ETH), Binance Coin (BNB), Cardano (ADA), Ripple (XRP) and Dogecoin (DOGE) all took double-digit dips.

What could explain the dramatic drop? Elon Musk’s tweet stating that Tesla would no longer accept Bitcoin for vehicle purchases due to “environmental concerns” has been cited as one factor. But even the mighty Musk doesn’t have the impact that China does.

The Chinese crackdown on crypto has seen its financial institutions banned from dealing in crypto transactions, including clearing, trading, and settlements. This was followed by an exodus of mining operations from the Asian superpower. Another blow comes from the USA, where a recent cease and desist order issued to New Jersey-based Bitcoin financial services platform BlockFi by the New Jersey Office of the Attorney General and the Bureau of Securities seems to have triggered a wave of panic among speculators, who are looking to get out of the market.

What does this mean for traders? While trading during a market crash can be emotionally tense, it’s also a time of opportunity. One only has to consider how much profit could have been made buying more Bitcoin during its $6,000 low point last year!

First of all, stay calm and assess the situation. Panicking and acting on impulse is rarely a good move in the market. You want to profit from other people’s panic, not participate in it. Consider your goals: are you looking to profit from investing in crypto in the long term or make a quick profit in the short term? Is your investment of an appropriate size (i.e., can you afford to take a hit in the short term)?

Remember that volatility is a persistent feature of crypto markets and is, in fact, the best way to profit from it. Previous Bitcoin price tumbles in 2017-2018 and as recently as 2020 provided golden opportunities for traders who bought low and sold high when the market bounced back.

Depending on your position, you may want to sell to salvage in the short term or lean into your investment for the long term. Alternatively, a hybrid approach could be safest: divest yourself of the assets you are least sure of but hold on to some to profit when the bull market returns.

Above all, don’t forget to use the full range of StormGain features to make your decisions. Check our trading signals to evaluate market conditions before you make a move. Keep an eye on the full range of altcoins to see any that might break the trend (remember, DeFi tokens did remarkably well during previous BTC price dips). And remember: you can trade to profit from volatility.